China Dealerships Flex Their Muscles

When Carson Guo set up his dealership for BMW’s Mini brand two years ago, he had to follow BMW’s every command concerning how much he had to invest, the size and location of the two-story showroom, even what paint colors he should use. He ended up putting 82 million yuan ($13.2 million) into the first independent Mini store in Beijing. Guo says he was told by then-BMW management that the company wouldn’t approve any other dealerships in Beijing within about five years, which would have let him break even in about three years. It didn’t turn out that way.

“There are so many Mini stores in China now, and dealers have to cut prices to sell cars,” says Guo, who estimates he’s lost more than 20 million yuan since opening his store. “Selling cars is costing us money instead of helping us make money. If automakers are not helping us out here, their interests will ultimately be undermined.”